In the World Bank's Extractive Industries Review (EIR), the oil and gas industry has something to regret more than the recommendation that the bank quit funding oil projects (OGJ, Feb. 16, 2004, p. 29).
It's the sadly well-founded doubt that resource development helps more than hurts impoverished countries.
The proposal to quit funding oil work is bad enough, although it probably won't affect much. International oil projects have funding sources other than the World Bank and its affiliates.
The problem with it is that, if implemented, the oil ban would give World Bank approval to energy selection by governmental bodies. Markets should do that.
The EIR, led by Emil Salim, a former energy minister from Indonesia, assumes that burning oil aggravates global warming and says the World Bank should promote renewable alternatives and natural gas as a "bridging fuel."
Environmental groups active in EIR consultations love that recommendation. They'll howl if, as expected, the World Bank rejects it and other such lurches.
The greater worry for the industry is the failure of oil and gas in many places to convey broad benefits to host-country populations. Too often, benefits go only to a select few.
The EIR points out that the record of extractive-industry contributions to economic growth has been "mixed." The economies of some resource-rich countries have shrunk after the start of development.
"Most academic studies of what is known as the resource curse suggest that, between 1970 and 2000, the number of states with disappointing outcomes was larger than the number with successful outcomes," the review says.
This lamentable proposition is not the fault of oil and gas or the industry that finds and produces them. But it bears heavily on the legitimacy of that industry's expatriate activities.
Where industry activities don't help local populations more than they disturb local conditions, they're unsupportable. To environmentalists opposing any and all oil and gas work, this is a ready lever for obstructionism.
Oil and gas companies need to turn the curse into the blessing that it should be. Their work depends on it. So does the welfare of a growing world.
(Online Feb. 27, 2004; author's e-mail: [email protected])